Top European football clubs are growing their operating revenues primarily by expanding their commercial activities, despite higher staff costs, according to analysis from KPMG which suggests clubs are positioning themselves as entertainment brands as much as sporting teams
The firm’s report compared business performance indicators of the champions of Europe’s eight most prominent leagues in the 2017/18 season - Barcelona, Bayern München, Porto, Galatasaray, Juventus, Manchester City, Paris Saint-Germain and PSV Eindhoven.
The majority of the clubs suffered an increase in staff costs, the main expense for a football club. The historic transfer of Brazilian striker Neymar from Barcelona to Paris Saint-Germain for €222m (£196m), and the ’domino effect’ it caused with Barcelona acquiring Dembélé and Coutinho as replacements, were some of the main contributors to staff cost increases for these two clubs.
Indeed, Barcelona registered €562m, which is also the highest increase year-on-year (42%), while PSG reached €332m (an increase of 20%).
According to KPMG’s valuation, Manchester City possesses the most valuable team (€1.18bn), while at a single player level, Neymar is the most valuable football player (€229m), followed by Kylian Mbappé (€215m) and Lionel Messi (€203m).
Six of the eight football clubs analysed recorded increased operating revenues. The exceptions were Juventus, which posted a 2% dip, and PSV Eindhoven, where revenues were down by 28%. Both failed to make it to the later stages of key competitions.
Galatasaray showed the highest operating revenue year-on-year increase (up 19%), which KPMG said was down to an improved domestic TV deal and better on-pitch performance, resulting in doubling attendance and a 63% growth in match day revenues.
Commercial growth represents the source of revenue with the highest impact on total turnover for six of the eight European champions. Bayern München was the most successful at growing their commercial revenue, reaching €316m.
For the two clubs where broadcasting remains the main source of income, both also registered the highest year-on-year growth in their commercial income. Juventus saw a 21% increase and Porto a 43% boost.
Andrea Sartori, KPMG’s global head of sports, and leader of KPMG’s football benchmark team, said: ‘Football is undergoing an important phase of change from a business point of view. Top clubs are moving towards an entertainment company model, transforming football organisations into real global brands, capable of attracting audiences from all over the world.
‘Our analysis highlights the prominence that commercial expansion is gaining: while match day income is affected by stadium capacity and broadcasting income by multi-year deals, proper management decisions and solid international commercial expansion strategies, supported by adequate sporting performance, can help grow markets around the globe.’
The European Champions Report 2019 is here
Report by Pat Sweet
